Patricia Joie M.

Clamonte Macroeconomics
4BSA-1 June 25, 2014

US unemployment rate drops to 7.3% amid
sluggish economic recovery
Jobless rate fell slightly in August but just 169,000 jobs were added
as Federal Reserve weighs cuts to stimulus program
Unemployment in the US fell slightly to 7.3% in July, its lowest level in over four years, but
the sluggish pace of recovery continued as the economy added just 169,000 new jobs.
The latest nonfarm payroll figures come at a crucial moment for the Federal Reserve,
which is weighing when and whether to cut its $85bn-a-month economic stimulus program,
known as quantitative easing (QE). Fed chairman Ben Bernanke has tied cuts in QE to the
health of the job market. The Federal Reserve open markets committee (FOMC), which is
split on when to pull back on the QE program, meets on September 17-18.
The jobless rate has now fallen from 8.1% a year ago but the pace of job creation
remains slow and the Labor Department revised down its numbers for the previous two
months after concluding job growth was less than expected.
The US added jobs in retail, healthcare, food services and drinking places, professional
and business services and wholesale trade in August, said the bureau of labor statistics.
The number of long-term unemployed (those jobless for 27 weeks or more) was largely
unchanged at 4.3m, these individuals accounted for 37.9% of the unemployed.
Unemployment for teenagers remained extremely high at 22.7% and for black people, at
13%, and Hispanics, at 9.3%.
The number of people not in the workforce in August rose to 90.47m, from 89.95m in July.
Republican house speaker John Boehner called the figures "mediocre". Gus Faucher,
senior economist at PNC Bank said they were "disappointing". "It's not just the headline
number, it's also the downward revisions to the previous months. The unemployment rate fell
but for the wrong reasons, less people are participating in the labour force."
June's nonfarm payroll figure was revised down from 188,000 to 172,000 and July was
revised from 162,000 to 104,000. The revisions mean the US added 74,000 less jobs in June
and July than previously reported.
"The labour market is not as strong as we had previously thought. I think this means the
Fed is less likely to taper off QE when it meets later this month," said Faucher.
On Thursday payroll company ADP said US businesses added 176,000 jobs in August,
fewer than in June and July but in line with economists' expectations.
Companies in all industries and of all sizes hired in August, ADP said, with professional
and business services firms adding 50,000 jobs. Manufacturers created 5,000, reversing a
drop in July, and construction firms added 4,000.
Mark Zandi, chief economist of Moody's Analytics, which helps compile ADP's report,
said: "It is steady as she goes in the job market. Job gains in August were consistent with
increases experienced over the past two-plus years. There is little evidence that fiscal
austerity and healthcare reform have had a significant impact on the job market."

Positive Economics
The article above is said to be of positive statements because the details therein are
facts and can be computed based on actual results. Also, it a manifests what is really
happening on the economy itself.

$10.10 Minimum Wage Would Lift 4.6 Million Out
of Poverty, Study Says
As Congress debates the increase, a new study shows the real-world
impact of raising hourly wages
If Congress were to go through with the plan backed by President Obama to raise the
minimum hourly wage from $7.25 to $10.10, 4.6 million people would rise above the poverty
line, a new study says.
The raise in minimum wage would reduce the poverty rate by as much as 1.7
percentage points according to a study by University of Massachusetts Amherst
economist Arindrajit Dube, who explains in his Dec. 30, 2013 report:
Starting from the current 17.5% poverty rate among the nonelderly population, the
estimate suggests a 1.7 percent reduction in the poverty rate from a 39 percent increase in
the minimum wage as proposed in the legislation.
In the long-term, the plan would reduce the ranks of the nations poor by 6.8
million, according to the Huffington Post.
Even with those impressive results, Dube pointed out that increasing the minimum wage
isnt the most direct way to fight poverty. Policies like the Earned Income Tax Credit and
food stamps are more effective, he writes in the study.
Normative Economics
Normative statements usually refer to factual evidence but it is not by itself factual.
Since, the article above tackles about the study on the effect of increase in minimum wage
to poverty and it is not a fact by itself but just estimation based on other facts it is thus
classified as Normative.
Quote
The production of too many useful things results in too many useless people."
This quote simply says that as the products in the market continuously improves and
cater the needs of the people there comes a time that people will rely more on such
products making them work no more making them useless.